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VAT and NON-VAT IT Company

Hi Vic,

Good day. I just want to ask regarding VAT and NON-VAT. I started as an independent IT consultant August 2011 with an IT company and one of the team handling contractors told me to register as non-vat since the projected income I will be earning for 2011 will not exceed the threshold of over 1.5M gross annual receipts. Prior to being an independent consultant I was a regular employee for another company from January to end of July. However even if we add this income it will not exceed the threshold so I registered as a NON-VAT and issue NON-VAT receipts. Now my question is, with the projected income I'll be earning for 2012 I'll exceed 1.5M. When should I register as a VAT tax payer? and can I issue the OR I have now even if it has non-vat tagging after registering as a VAT payer. I have 20 booklets of ORs but since I only issue 2 ORs per month so I'm wondering if I still need to request to create a new OR with VAT tagging.... thanks and I hope I have made my questions clearer...

Hi, with the projected revenue you will be earning for 2012, it's good to change your registration now from nonVAT to VAT. Even though you registered as nonVAT if your revenue/sales exceeds the threshold 1.5M - you are already considered as VAT liable. That is why some companies who think that their sales/receipts will meet the threshold (example if they earn revenue of 375K in a quarter) already register their company as VAT registered. Now, with regard to your old OR/invoices, you can visit BIR and ask a permit if they will allow you to stamp your old nonVAT invoices with VAT indication while you are in your process of registering and printing your VAT registered OR/invoices.

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Starting 2012, it is P1,919,500 and no longer P1.5m. Apart from the simple application of the rule on threshold is the implication of input VAT as contrasted to the 3% OPT to determine which is more beneficial. If you do not have much input, I would suggest for non-VAT so more fees goes to your pocket than to taxes.

Hi is this new threshold of 1.9M effective for 2012? Is this a new ruling from BIR? I just read your mail and it is exactly my concern that I have not much of input tax so at the end of the day I will be paying more taxes when I become VAT registered. Also, the company I'm working for is zero rated so I cannot charge them the VAT amount for my professional fee. The company is a PEZA registered and I was thinking to file zero rated application. Am I qualify for zero rated application?

Hi is this new threshold of 1.9M effective for 2012? Is this a new ruling from BIR? I just read your mail and it is exactly my concern that I have not much of input tax so at the end of the day I will be paying more taxes when I become VAT registered. Also, the company I'm working for is zero rated so I cannot charge them the VAT amount for my professional fee. The company is a PEZA registered and I was thinking to file zero rated application. Am I qualify for zero rated application?

Hi IC_0925. Yes, it is effective for 2012 and a new Ruling of the BIR. If your sale to PEZA company relates to their registered activity, then, yes it could qualify zero-rating and you ask for PEZA VAT Certificate of Zero-rating and PEZA Certificate of Registration in support of your zero-rating. Under zero-rating, you do not pay 12% VAT and keep your input taxes where you either apply for refund or tax credit or carry-over until your next VAT transaction. It maybe worth to retain your VAT registration because if you go for percentage tax (OPT), you will pay 3%, though you will expense the input VAT passed on. I suggest you make sample computations to see which is better of. Be minded also of the 3-year irrevocability of your VAT registration in considering for OPT registration.